While certainly jp's answer covers the rules, your question also asks about situations you might want to, aside from politics (both inside and outside the game. I can say we've changed the rules substantially in our house because I'm not a fan of sleeping on the couch. What can I say, Alberta girls are competitive.)
I immediately think that if you have 7 cards in your hand, and not a good way (or even possible way) to play them, then you're going to put yourself at 8 cards. I would still consider it worth the risk, because hopefully you can trade still, but it is certainly a valid reason to pass up on the card.
An unlikely but probably possible scenario would be if your settlements and cities happen to touch every possible tile on which you could place the tile to steal and you don't feel like blocking your own tiles. I haven't done the math to see if it's possible. I highly suspect in this scenario you would have much more territory (as it were) than your opponents and not in a great deal of danger of losing, but nonetheless I present it as a scenario.
While I have your attention, I should note that while you mentioned blocking a settlement, this is no more part of Catan than money in the middle is part of a Monopoly as previously covered on Stack Exchange (although admittedly that was nearly 8 years ago and things may have changed.)